The
Finance Ministry has worked out
modalities where banks will report
a list names and permanent account
numbers (PAN) of customers who
earn less than Rs. 5000 interest.
Many non-salaried people in India
invest money in fixed deposits but
do not report the interest earned
as income for taxes. The Income
Tax (IT) authorities made it a
policy for banks to deduct taxes
at source for accounts that earn
more than Rs.5000 before
distributing the money. However,
as a workaround to taxation, many
opened fixed deposits that earn
less than this amount so they do
not have to pay taxes. The latest
move is to track those accounts
and bring this into the tax net. A
very small percentage of Indians
pay direct taxes and instead use
"black money" on the
sly.

The
National Association of Software
and Service Companies (Nasscom)
said that while cost advantages
were initial key drivers for the
IT industry's growth it is
innovation that is taking it
forward. Last year Information
Technology (IT) and IT Enabled
Services (ITES) companies earned
USD 20 billion, which is only a
fraction of the global USD 300
billion addressable market. To be
able to win more of that pie,
Nasscom said that the "next
killer application" must come
from India. Noting that these
industries are growing rapidly, it
said that the Business Process
Outsourcing (BPO) industry needed
2.3 million people by 2010 and it
anticipates a scarcity in India to
meet the need. However, there is a
trend where most engineering
students prefer to stay in India
than go abroad; only 30% of Indian
Institute of Technology (IIT)
students emigrate as opposed to
70% only a few years ago.

Democracy,
Politics and Judiciary

As
part of the ongoing investigation
into the oil for food (OFFP) scam,
the passports of 5 people
affiliated with the Congress party
have been impounded. One of the 5
was the son of the former Foreign
Minister Natwar Singh, Congress
Member of Legislative Assembly
Jagat Singh. The oil for food scam
arose from a report filed by
former US Federal Bank Governor
Paul Volker on the controversial
oil for food program in Iraq. The
program came into force after the
United Nations imposed economic
sanctions on Iraq after the first
Iraq war but allowed it sell oil
for food and medicines. Human
Rights organizations estimate that
the economic blockade killed half
a million children. The program
got subverted when the erstwhile
Saddam Hussein regime handed out
oil vouchers to recipients,
usually people with influence in
host countries, so they an
influence favor for Hussein's
benefit. The recipients could then
sell the vouchers at international
prices to those wishing to export
oil out of Iraq. Singh Sr. was one
of the three people identified in
India as having benefited in the
scam. Singh Jr. accompanied his
father on the trip to Iraq when it
is believed that the deal was
struck. There is suspicion that
the father did this at the behest
of his son.

A
high-power Committee in
Maharashtra recommended that the
state make child labor a non-bailable
(NB) crime. It found that in many
instances where employers of child
labor were arrested, the loopholes
in the law saw them walking away
with small bail bonds. The
Committee said that the worst
offenders were the gold and
jewelry industry, zari units,
garages, and leather and tannery
workshops. Children are forces
into labor due to poverty but are
exploited by employers who force
them to work for several hours
with rest, education, and inhuman
conditions. They suffer physical,
psychological, and sexual abuse
and the perpetrators often operate
with impunity. Maharashtra will
become the first state in India to
have such legislation that will
curb the enthusiasm to employ
children.

Environment,
Health and Education

French
President Jacques Chirac ordered
the condemned aircraft carrier Le
Clemenceau to return to France
after the highest court ordered a
recall. After issuing the order,
he said his Government will
"examine ways of reforming
France's policy on exporting waste
materials." Specifically,
France will study "how to
manage maritime wreckage with
partner countries." France
says that Europe does not have
suitable wreck-yards to dispose
such a large ship. This closes a
real thorny issue ahead of
Chirac's visit to India.

The
scare of the dreaded H5N1 bird flu
virus spread in Europe with
Germany reporting its first
outbreak. European Union is
banning the import of all
untreated meat and feathers to
curb a large scale spread of the
virus. Recently spotted in Greece
and Italy, the virus has already
arrived in Austria, Bulgaria,
Croatia, Romania, Slovenia, and
Ukraine. Europe is bracing more
instances with the impending
summer migration of swans.

In
a post-Iraq Quadrennial Review,
the US is proposing to involve its
present allies and "moderate
Islamic regimes" in the war
on terrorism. Calling this fight
"The Long War," the
documents says that this coalition
will "share the risks and
responsibilities of today's
complex challenges." Measures
proposed, funded by a USD 513
billion defense budget for 2007,
include creation of more special
forces, unmanned drones for
targeted assassinations, a new
long range bomber force, a new set
of experts trained to control
nuclear devices. According to US
Defense Secretary Donald Rumsfield,
these initiatives will
"create an environment
inhospitable to terrorism."
British Foreign Secretary Jack
Straw echoed Rumsfield in Nigeria
saying that the next major
challenge will be to deal with
homegrown African terrorists. He
said that these terrorists will be
based in Africa and attack African
and international investments
world over. While Germany backs
the idea of the North Atlantic
Treaty Organization (NATO) to move
beyond its borders, it is cautious
on future military engagements.
The NATO said that it does not
want to be a global policeman but
recognized that it had
"increasingly global
partnerships." There are
several legal issues with respect
to unmanned drone based
assassinations such as legal
infringement, geographical
borders, sovereignty, and safety
of population.

An
Iranian delegation will travel to
Russia February 20 to further the
Russian proposal on nuclear
enrichment for Iranian nuclear
reactors. The negotiations
themselves are crucial to stave
off a major confrontation between
Iran and most countries at the
United Nations in March. Fearing
Iranian intentions for enriching,
the European Union-3 (EU-3 of
Britain, France, and Germany)
arranged for Iran to stop its
enrichment through the Paris
Agreement. Iran unilaterally
suspended this agreement and
commenced enrichment at Natanz.
When EU-3 Iran negotiations broke
down, the EU-3 and United States
took the matter to the
International Atomic Energy Agency
so the case may be referred to the
United Nations for punitive
economic and possible military
sanctions. Russia and China with
large oil and trade interests in
Iran negotiated a month to
convince Iran of an alternate plan
that would entail enriching
uranium in a joint venture in
Russia. However, Iran has three
pre-conditions that include the
involvement of Iranian specialists
during enrichment, critical
portion of enrichment to happen in
Iran, and the involvement of a
third partner. Russia did not mind
a third partner but did not want
Iranian specialists during
enrichment much less in Iran.
Unless there is some agreement in
Russia, the issue could degenerate
further and create yet another
unstable situation in West Asia.
Iran has promised to use its
missile arsenal to attack Israel
and occupation forces in Iraq if
it is attacked.

The
Dalai Lama's Tibetan envoys held
secret parleys with China on the
question of Tibetan autonomy
within China. This is the fifth
round of conversations with China,
which has not really produced any
tangible results. However, Tibetan
negotiators said that they
exchanged views frankly and
openly. China is showing great
interest in this process, which
does not even publicly
acknowledge, because of fears that
the death of the 70-year old Dalai
Lama will create a rallying point
for disaffected Tibetan youth
wanting complete independence for
Tibet. In what he calls as the
"middle way," the Dalai
Lama is asking for autonomy with
China and not complete
independence. He runs a Government
in exile from Dharamsthala in
India.

Maoist
terrorists in Nepal ambushed an
army patrol killing three soldiers
and abducted 9 people including 5
Government employees. The latest
strategy of the terrorists seems
to be to kidnap Government
employees to force a prisoner
exchange. King Gnanendra who
dismissed a democratically elected
Government last year accusing it
of not doing enough to contain
terrorism has imprisoned many
terrorists. Gnanendra is under
intense international criticism
for his action to stifle
democracy. He organized mayoral
elections recently, which saw more
nominations winning uncontested in
history. Under threat of reprisals
by terrorists, many candidates
withdrew their candidature. A
13-party political alliance says
that it does not back the
terrorists but both groups called
for a boycott, which ended in a
25% of the adult franchise casting
votes.

Three
more people died in Pakistan's
troubled North West Frontier
Province (NWFP) when the police
tried to quell a riot by 50,000
people protesting the Danish
cartoons. In Lahore, there was a
gun exchange between protestors at
the Punjab University and security
forces. Multi-national companies'
property, banks, and other places
of business were targeted.
Observers were surprised at the
sudden surge of anger when the
issue has been largely quiet
elsewhere in the world after
public and diplomatic apology of
EU to Islamic countries. Some
suspect that some party may be
trying to make political capital
of the issue. A multi-religious
party alliance has called for a
national strike on March 3,
coinciding with the visit of US
President George Bush to India.